years after its founding by Central Bank Governor Ajit Nivard
Cabraal, Capital Reach Holdings has in its first annual report
said that it was looking at listing its bigger subsidiary,
Capital Reach Leasing Limited (CRLL), on the Colombo Stock
Exchange (CSE) in the first half of this year.
"We believe that the bigger subsidiary CRLL has
now reached the necessary milestones to be listed in the Colombo
Stock Exchange. We will take steps to list the company in the
first half of the year 2008," Mr. Mayura Fernando, Chairman of
Capital Reach said.
"This will be followed by the listing of the
parent company CRHL possibly in the second half of the same
Cabraal who resigned as chairman of the company
following acceptance of public office has been thanked by the
present chairman "for guiding us through the difficult period of
infancy and laying a strong foundation on which we continue to
build our business."
The governor’s wife, Mrs. Roshini Cabraal,
succeeded Cabraal as chairman but resigned following his
appointment as Governor of the Central Bank. Following President
Mahinda Rajapakse’s election, Cabraal was first appointed
Secretary to Ministry of Plan Implementation before taking on
his current position as Central Bank Governor.
Capital Reach Holdings has three subsidiaries,
Capital Reach Leasing (66.56%), Capital Reach Credit (67.03%)
and Capital Reach Business Development (Pvt) Limited (100%) with
the first two companies purchased from Vanik for a part cash and
part share consideration.
Fernando explained the delay in presenting the
company’s first annual report for several reasons including the
inability of Messrs. K.P.M.G. Ford, Rhodes, Thornton and Company
to assume duties as the company’s auditors due to a technical
issue. Ernst & Young was thereafter appointed in November 2006.
"The other major reason for the delay was the
complicated nature of the process of acquiring the two
subsidiaries. This resulted in tedious calculations to assess
the intangible assets and agreeing on the subsequent accounting
treatment in keeping with the current accounting standards,"
He has said that the financial statements for
the year ended March 31, 2007 is currently under audit and the
second annual report of the company will be out during the next
Capital Reach raised a total of Rs.219.5 million
in a private placement of shares concluded in February 2006.
Together with shares worth Rs.52.5 million issued to Vanik as
part consideration for the two subsidiaries, the share capital
now stands at Rs.272 million. He said that Vanik was paid Rs.45
million cash and a further sum of Rs.149 million was invested in
the subsidiaries purchased from Vanik.
During the first year of operations, the company
was described to have performed "satisfactorily" although a loss
of Rs.9.2 million was posted for the period under review which
included the writing off of Rs.5.7 million pre-operational
Capital Reach Leasing posted Rs.41.7 million
interest income in the nine months ended March 31, 2007 and an
after-tax profit of Rs.6.8 million. After discounting Rs.2.3
million minority interest, this subsidiary has contributed
Rs.4.5 million to the group bottom line.
The subsidiary’s leasing and hire purchase
portfolio had grown 78% from Rs.169.3 million to Rs.772.5
million during the period under review while its term loan
portfolio grew 81% to Rs.11.7 million from Rs.6.5 million.
Fernando noted that the lending portfolios and
revenue have grown over five fold in less than two-and-half
years and the high rate of growth which continues was expected
to gradually slow down over the next five years.
He said that Capital Reach Leasing and Capital
Reach Credit were proud of the quality of their lending
portfolios with both companies maintaining their non-performing
loans at approximately one percent of the total portfolio.
SunTex International Holdings Limited with
27.6%, Vanik Incorporation Limited (19.3%), Aegis Fund
Management (Pvt) Limited (9.2%), Finco Group of Companies
(9.2%), Readywear Industries Limited (3.7%) and Mr. G. Nadarajah
(3.7%) are the six biggest shareholders of the company where the
top 10 shareholders also include Prudential Assurance Lanka
Limited and MAS Holdings (Pvt) Limited.
One foreign institution and three foreign
individuals own approximately 29% of the company.
The issued share capital of the company is
Rs.272 million. A reserve fund of Rs.0.1 million and a retained
loss of Rs.31.7 million (for the group) were written in the
books as at March 31, 2006.
The directors of Capital Reach Holdings are
Messrs. Mayura Fernando (Chairman/MD) D. Muthukumarana, Sumant
Batra, Mrs. Priyanthi Pieris, Sarath Weerasooria, Anura Fernando
and C. Ramachandra.